Tomorrow we will learn the latest CPI report from the US, which will be the main event of the week. Higher-than-expected data, especially the core data, should support the dollar as the market will price in a more hawkish Fed. Conversely, if the data fails to fulfill expectations and inflation falls below the expected 3.1%, we should see a weakening dollar in the short term, as the market will assume no interest rate hike at the upcoming July 26 meeting, or perhaps even a rate cut.
After the CPI report, we will end the week with the release of US jobless claims data on Thursday and the University of Michigan’s consumer sentiment on Friday.
RBNZ and BoC make decisions on Wednesday, July 12
Two other important events this week are the decisions of the central banks of New Zealand and Canada, which will be announced tomorrow, i.e. Wednesday, July 12.
Tomorrow morning during the Asian session (around 4 o’clock), we will learn about interest rates in New Zealand. The market expects rates to be left unchanged at 5.5%. Since liquidity in these hours is lower than in the London or NY sessions, we can expect a significant volatility.
After the last decision on May 24, despite the 0.25% hike as expected, the market reacted with declines of nearly 80 pips on NZDUSD in the first 5 minutes, and another 80p by the end of the day, bringing the total for the day to 160p. Maybe it is worth sacrificing this night for a similar opportunity ?
Bank of Canada- will it surprise the market this time too ?
The USDCAD pair behaved a little differently, when at the previous meeting (June 7) the BoC unexpectedly raised rates by 0.25% – here the Canadian dollar immediately after the decision strengthened against the USD by 70p, but just 4 hours later returned to the levels before the decision. The market again expects to leave rates unchanged at tomorrow’s meeting, the effects of which will be known at 4pm.
LIVE EDUCATION SESSIONS
This WEEK (10-15 July 2023 ) I am pleased to invite you to several online sessions. Below is the schedule of meetings:
The above analysis is based on the PA+MACD strategy, a detailed description of which you can read HERE . I will talk more about the PA+MACD strategy applied to these currency pairs during the live trading sessions which you can attend from Monday to Friday.
More current analysis on the group : Trade with Dargo